Dialing Into Retail

I listen to countless hours of retail conference calls, so let me save you some time with a few takeaways.

Stick with Under-Promise and Over-Deliver: Lowe's vs. Home Depot

Yes, we know housing is moving in the right direction. Another rosy data point: the S&P/Case-Shiller Home Price Index rose 0.9 percent in December, topping expectations of a 0.5% gain. If you played the "It can't get any worse" housing trade a year ago with Home Depot (HD) or Lowe's (LOW), you would be up 35% or more as HD has outperformed.

However, execution at both companies continues to have a wider gap than their similar stock returns imply. Fourth-quarter results mark 12 of 14 quarters that HD same-store sales have outperformed LOW. This quarter, HD's same-store sales outperformed LOW's by 500 basis points compared with an average of 280 bps for the past three quarters. If you believe the housing trade still has legs, HD has provided conservative guidance for 2013 (3% same-store sales for 2013 after 7% comps in the fourth-quarter 2012). On the other hand, LOW issued same-store sales guidance of 3.5%. With a slew of overly aggressive guides behind the company, I would continue to play the under-promise and over-deliver name, HD, not to mention a company with superior real estate and larger exposure to the important pro business.

More on the Tax Refund Blame Game: AutoZone

AutoZone (AZO) took a page from Wal-Mart's (WMT) playbook, calling out delays in tax refunds. It seems sales of auto parts in the last two weeks of the quarter decreased 8% vs. a typical increase for the last two weeks. Only time will tell whether this is the blame game or something worse. Note that Wal-Mart did say trends improved after refund checks started flowing. It sounds like we don't need to worry about the savings rate rising this year.

Online Disclosure Bites the Dust: Macy's

First retailers pull the plug on monthly same-store sales and now Macy's (M) tells us it will stop breaking out online sales growth. I'm a big supporter of companies that are investing in omnichannel (integration of in-store and online sales), even when it comes at the expense of short-term margins; however, I like to be reassured the investment is still paying off on the sales line. Saks (SKS) stopped disclosing online a while back. Your move Nordstrom (JWN).